Problem:
Martell Mining Company's ore reserves are being depleted, so its sales are falling. Also, because its pit is getting deeper each year, its costs are rising. As a result, the company's earnings and dividends are declining at the constant rate of 5% per year.
Required:
Question: If D0 = $4 and rs = 11%, what is the value of Martell Mining's stock?
Note: Show supporting computations in good form.